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The Key to the Broffordable Care Act's Success

When Barack Obama made the decision to design a universal health care program based on the private insurance market, he faced one key problem. If you require insurance companies to accept anyone regardless of pre-existing conditions—as everyone wanted—you face the threat of "adverse selection," in which only those who are sick (and therefore expensive) get insurance. Just as the system of car insurance needs those who go long periods without having an accident to pay premiums so there's enough money to fix the cars of those who do have accidents, the health-insurance system needs the currently healthy to keep paying to support the currently sick. The answer was the individual mandate, which pulls people into the system and expands the risk pool. And especially critical to expanding that risk pool is getting as many young, healthy people as possible to get insured.

So it may have been inevitable that young people would become targets for both the law's advocates and its opponents. A couple of months ago the Tea Party group FreedomWorks began a campaign to convince young people to remain uninsured, couching it in the symbols of rebellion by having people burn Obamacare cards (since there is no such thing as an Obamacare card, the organization printed some up so they could be burned). An organization funded by the Koch brothers created creepy ads to convince young people not to get insurance with visions of a gigantic Uncle Sam puppet giving young women pap smears. On the other side, the Obama administration has created videos targeted at young people. Knowing how kids today love pictures of cute animals, someone made the Adorable Care Act tumblr. And then there's one Colorado group's "Brosurance" ads, which are in a class by themselves:

So who are these youngsters? Fourteen percent of the population, or around 43 million Americans, are in their 20s. Most of them don't have a lot of disposal income; the median income for households headed by someone under 25 is less than half that of households headed by someone between 35 and 44 ($31,000 compared to $64,000, according to the latest census data). Although most of them have insurance, many don't; the uninsured made up nearly 30 percent of people between 18 and 24 in 2009, after the recession hit. This gave them a higher rate of uninsurance than any other age group.

But then in 2010, the Affordable Care Act passed. Among the first provisions to take effect was one allowing young people up to age 26 to stay on their parents' insurance. The effect was almost immediate. In 2009, before the ACA passed, 31.4 percent of those between the ages of 19 and 25 were uninsured. By 2012, that figure had dropped to 27.2 percent. While a four percentage point drop may not seem like a revolution, it represents hundreds of thousands of young people who were able to get insurance thanks to the law. (See here for most of the data cited in this article.)

Most young people who have insurance get it from private insurers, the majority through employers and the rest on the private market. In the wake of the recession, there was an increase in the number getting government insurance (which includes both programs like Medicaid and coverage for those in the military). So the rates of both public and private insurance rose as the number of uninsured declined.

The truth is that while we talk about the importance of young people being in the risk pool, what matters isn't their age but their health. On average, young people will be healthier longer, but every year the system needs plenty of healthy people of whatever age they might be. When you ask them, the young are much more likely to report being healthy, with self-reported health declining the older you get.

The healthier you are, the less likely you are to need medical services. And it's here that the difference between the young and the old, and its implications for the cost of health care, become particularly clear. Twenty-five percent of young people responding to census surveys said they had three or more doctor visits in 2011, and only 16 percent said they were on some prescription medication. Those numbers increase inexorably with age, to the point where most senior citizens are on medication and going to the doctor with regularity. But even among the young, the numbers are still substantial—one quarter of young people regularly needing doctor visits produces a lot of health-care spending.

Young people are being targeted now not only because their relative health makes them critical to the risk pool, but also because they're highly likely to be uninsured, and uninsured by choice. If you find a 50 year old without insurance, there's a good chance it's because she has pre-existing conditions that have made it impossible to get, but a 20-year-old without insurance may just think she doesn't need it. Once insurance is available to all regardless of health starting January 1, that 50-year-old is going to be eager to get it, but the young person may still resist, which is why everyone's working so hard to win his heart and mind.

Healthcare.gov

Of course, if we had a single-payer health program, even one joined with a system of private supplemental insurance, we wouldn't have to worry about whether we needed to cajole, beg, threaten, or otherwise encourage the young and healthy (or the middle-aged and healthy, for that matter) to join the risk pool, because everyone would already be in it. Maybe some day.

Comments

Hear, hear! I agree wholeheartedly. Moreover ALL insurance companies should be forced to accept preexisting ailments as well. Why should I have to pay health insurance all my life, when I only really need the coverage when I become ill? Similarly why should I have to keep paying and paying home insurance, when the only time I really need it is after the preexisting problem of a fire? It should be my option, forced on insurance companies, to start my coverage right after the fire starts (saving me all those years of unnecessary payments).

The great thing about Obamacare for healthy people is that they don't need to sign up until they get sick or need an operation. There is no reason to pay a few thousand dollars a year for health insurance when you can wait until you really need it. Do you have any idea what a young person's budget looks like, with the need for housing, heat, car insurance, and gas at $3.50 a gallon? There is no room for something as unnecessary as health insurance.